There could not be a better time for this Movers & Shakers interview with Dr Daniela Gerd tom Markotten. She is the CEO of REACH NOW, which was previously known as moovel.  The interview follows closely on the heels of the BMW Group and Daimler AG’s announcement that they would be investing over €1billion to create an industry leading urban mobility services provider that draws on the synergies of five key joint ventures: REACH NOW for multimodal services, SHARE NOW for car sharing, FREE NOW for taxi ride-hailing, CHARGE NOW for charging and PARK NOW for parking.

In a candid chat with Sarwant Singh, Senior Partner & Head of Mobility, Dr Gerd tom Markotten spoke about REACH NOW’s vision for the future of mobility, the growing openness of cities to new solutions and partnerships to tackle their mobility challenges, and about how REACH NOW is hoping to drive more flexible and sustainable approaches to meet the mobility needs of cities and their citizens.

Sarwant Singh (SS): What is your vision of the future of mobility and where do you see REACH NOW as part of this vision?

Daniela Gerd tom Markotten (DGtM): Cities are growing and there are significant challenges that need to be urgently addressed in urban areas to make them more livable. This is highlighting the importance of new global players in the mobility space that recognize the need to bundle resources and offer a comprehensive range of mobility services that support a more sustainable mobility ecosystem.

On the one hand, there is a mindset shift in Daimler and BMW in their efforts to solve the issues faced by cities. Autonomous vehicles in the long-term and electrified vehicles in the shorter term represent contributions to mobility in urban areas that will change the ways in which people commute.

We, at REACH NOW, together with our other verticals like car sharing, ride-hailing, parking and charging want to collaboratively address different aspects of urban mobility. Especially if we combine these services, we can have a big impact, while making it more convenient for people to get around and have more livable cities.

SS: How are you going about implementing your vision? We understand that cities are not always easy to work with. How are you convincing them?

DGtM: Our vision is a world without traffic jams. At REACH NOW, it is in our DNA to identify the biggest pain points in cities from a citizen perspective, and see where we can make the most useful contributions to resolve these challenges. For that, we really need to breathe life into Mobility as a Service (MaaS). Our idea here is that, ultimately, it will not be necessary to use your own car because mobility, whenever and wherever you need it, is at your fingertips.

In the meantime, cities are opening up and we see a complete mindset change in them. On the one hand, this is because the pain points are getting progressively larger, creating a sense of urgency about finding effective solutions. On the other hand, more and more public transit agencies and cities themselves see that they can make a real difference if they become mobility managers of their own cities. This includes, for example, being able to control traffic, channel the movement of people, and incentivize them to opt for sustainable mobility modes.

The need for solutions is therefore motivating cities to open up to partnership opportunities. While the demand is still for city-specific apps or solutions, the overall theme is about trying to find more convenient ways to get around cities and offering more flexibility in order to optimize the use of different mobility modes.

SS: How do you see cities engaging with you? Do they want to take the lead themselves or are they looking for partners like REACH NOW to take the lead? And also, do they see this as core to their business?

DGtM: Cities are different, their pain points and requests are different. Approaches vary by market, country and city. We offer our branded app, the REACH NOW brand, for cities that want to provide a mobility portfolio to their citizens but do not themselves want to assume this responsibility. We also offer this app as a white label solution to cities/public transportation agencies that want to be perceived as urban mobility managers.

In technical terms, both the branded and white label solutions have the same core, albeit with some adjustments depending on the specific demands of each city. So the backend architecture and user accounts are the same, enabling people to move from city to city while enjoying the same mobility experience and app workflow.

SS: How does this business model work? Are you licensing the app and the platform or are you looking at different types of models?

DGtM: We are flexible on this score as well. For cities, it’s not only about the project and set up costs; it’s equally about the big picture perspective i.e., the major pain points that they want to address, the mobility modes available to address these challenges and what missing pieces need to be added to the multimodal platform to make it more relevant and attractive. This, in the end, will determine whether citizens and end users use the app on a daily basis or not.

Typically, therefore, there is much more to setting up a MaaS platform in a city than just implementing the software and stepping into the Software as a Service model. For us, it is about the project we are setting up, the software services that we are providing and it is also about the commissions that we are getting from transactions going through the licensed model of our platform.

SS: What type of revenue potential do you see in the market? How much of that has been tapped and how much remains?

DGtM: The mobility market is the biggest market waiting to be digitized completely. It is about €500 billion at the moment. If you take all the mobility modes into account, it is huge. But levels of digitization are completely different across countries. In Germany, for example, only 6% of private on-street parking has been digitized so far. So there’s still plenty of room for improvement. The same goes for public transit as well.

The market will grow especially with regards to shared mobility, which includes public transit. From my perspective, public transit is the backbone of the whole urban mobility spectrum. That is why a MaaS platform in any city has to include public transit ticketing or else it will never be a compelling offer for citizens. Indeed, if you look at the modern mix in cities, especially in Europe, public transit dominates. For example, it is 69% in Paris and 45% in Berlin. Public transit is the most efficient mobility mode to transport a lot of people though the city and avoid traffic jams, making it an essential component of any multimodal platform.

SS: Do you see any cities or regions like China where white labelling is preferred to the REACH NOW app? How does the roaming concept work in such cases?

DGtM: Only recently we launched a white label app in Japan in the Izu region, south of Tokyo, because our partners there want to have it under their own brand and only have it powered by REACH NOW. This is the case in most Asian markets. In Europe, in the Nordics, it is mainly own branded solutions, so every offer or every mobility service provider runs under their own brand. In the US, it is mainly white label, especially if you collaborate with cities, since it is done via tenders that are offered by public transit authorities or cities. In Europe, it is more difficult because it varies from country to country and sometimes even from city to city.

In terms of roaming, the backend architecture and the core functionality of the app is still the same and, perhaps even more importantly to us, is that both approaches—whether REACH NOW branded or white label— support a superior user experience. At the backend, there is one single user account for one person with one single payment account. You can have different payment profiles for your business and private interests but these are all tied to one person. This means the person can travel from city to city while using the same user account.

SS: So you are developing a transaction where, if the customer moves from one market to another, there is some kind of seamless connectivity for them?

DGtM: Yes, it is geofencing, which is a simple but well established technology in the mobility space. The customer can move from market to market while the payment can still be made through the same account. The payment process is run by our platform and extends to other mobility service providers who have integrated with our platform. In turn, we pay these providers after they have delivered services to citizens. So this is the payment process we have on our platform for end users and mobility service providers.

SS: You had talked about city to city differences. So will it be a challenge to make this a pan European offering? Will it become easier to develop these systems at a country level and also at a regional level?

DGtM: Yes, we will expand our offering. We will grow our footprint significantly not only in Europe but worldwide as well. Currently, we are focusing on Europe and Japan. Japan is a good market for us since it has densely populated areas. We are constantly searching for cities where, either because of their density or their geographic situation, we can contribute and overcome this city by city approach. As a fact, there has been significant change in the recent past; cities and countries are opening up and adopting a more standardized approach and open data format making it easier for us to step into these markets.

SS: How does the commission structure in your business model work? Our understanding is that it seems to be about 5-8% for operators to come in. Is this what you see or is it different? How is it between public transport operators and private companies? Do you see a willingness to pay that kind of money?

DGtM: It really depends. In some cities and countries, public transit is commissioned in an attractive way, while in others the margin is much lower. Nevertheless, from a strategic perspective, we are hoping to offer services of other mobility service providers and public transport ticketing. So it is quite a big range but we are attempting to negotiate in order to run a profitable business.

SS: In some cities like Helsinki, for instance, we see that public operators don’t want to pay but private ones are paying and that’s where MaaS Global is making some of its money. So where do you focus to run your business profitably? You need the public operators because without them you can’t have the platform running. However, are there revenues coming from these partnerships?

DGtM: We are fortunate because we are a part of the mobility joint ventures from Daimler and BMW Group. We already have strong players with the car sharing vertical and ride-hailing vertical on our platform. This is attractive to other mobility service providers like bike sharing or scooters in that if they integrate into our platform, they gain improved access to citizens. This is appealing and so they are willing to pay a commission to us as well. And, it is important to note that they are only paying if there are really transactions happening on our platform.

SS: is there any particular customer base- B2B or B2C – that is more attractive for REACH NOW?

DGtM: I’d say B2G in that we are talking to public transit authorities but they are more like partners while citizens are our B2C base. One of the latest products that we are very excited about is the offer of mobility budgets. In it companies can offer employees incentives to get around the city in the way they want by using our app. This is how it works. A company can issue maybe €100 per month to an employee who can then, over the course of a month, leverage our app to use whichever mobility mode they want with the amount deducted from their credit balance stored on the app. With this, we are addressing a whole different target group. Here, on the one side, we are talking to companies and encouraging them to offer employees the whole range of mobility modes that are available in their city. And, on the other, we are motivating companies to see how best they can to contribute to a city without traffic jams and incentivize their employees to come to work in the most sustainable way possible. Our goal is to make our MaaS platform an everyday mobility companion. That is what we are going after.

SS: On a project with BMW’s mobility division we examined mobility allowances and mobility budgets and found that countries like Holland were very attractive. Is that the same view you hold? Is Europe, or any particular country, more attractive for mobility budgets?

DGtM: For us it’s about combining all mobility options to offer an even more attractive service. It’s perfect timing for companies, especially those with their headquarters in city centres with limited parking options. Mobility budgets offer something different, allowing people the flexibility to use multiple modes of travel. Among young people, particularly, there’s a blending of business and private spheres, and for them mobility budgets are very convenient. At REACH NOW, for example, we have already had mobility budgets for three years. It is one of the most loved incentives for our employees because, on the weekend, they can get home from a bar with their friends taking a taxi and can actually say that their employers are paying for it! We have implemented it in several companies, including for more than 3,000 employees of Daimler Financial Services in Germany. They enjoy the mobility budget and we have received very positive feedback from both sides. It seems to be like perfect timing because companies want to have sustainable practices that contribute to making cities more livable. It is also a useful tool to recruit talent; it shows that a company is looking beyond a company car and instead is offering employees the flexibility of MaaS as they want to have it.

SS: Recently I met up with a group of bankers who were very interested in the IPOs of two large ride-hailing firms. Their question to me was how do you build barriers to entry in the ride-hailing business? I am assuming it is the same in MaaS where any new player can enter the market and undercut you. One of the ways to raise barriers to entry we found and recommended was to set up subscription based models. Is that something you are also looking at which is similar to the mobility budget i.e., mobility subscriptions? Is that the way forward?

DGtM: The mobility budget is already like a piece of it. From my perspective it might be even better than subscription because in subscription you are addressing the B2C target group with a flat rate. If you do that via employers than you can be quite assured that you have a recurring business and don’t have to decide every single month whether you want to continue. So it’s a new approach but that is certainly the way to go and that’s why we are offering the service as well. And yes, we are keeping a close eye on the two ride-hailing firms that you mentioned. Not that we are apprehensive because they have to overcome the access to public transit as well. Indeed, we are very well positioned as Daimler and BMW Group have joined forces and really want to grow as a global tech player for mobility.

SS: If you look at the valuation of these ride-hailing giants it is $100 billion and the valuation for the ride-hailing market is $1 trillion. We have a similar valuation for MaaS. Do you think REACH NOW could be a $50 to $100 billion company in the next 5-7 or even 10 years?

DGtM: We’re taking this really very seriously and pushing forward knowing that we have the full commitment of our shareholders. We are aware and understand that the investment structures of these big ride-hailing companies are different. Simultaneously, we are in the process of building on our valuation.

SS: What about new types of on route mobility service offerings, like hotel bookings? Do you think they will be integrated into the MaaS platform?

DGtM: On route mobility service offerings are similar to ‘anything as a service’! The approach of integrating on route mobility service offerings into the MaaS platform is 100% right and that is how I see it as well. Mobility is usually about getting somewhere and so it is becoming more and more important to focus on what is the destination/purpose/reason for why are we travelling and how can we integrate that into the platform. That, for me, is the next logical step and the direction to go.

SS: You have a very interesting background coming from the freight industry, especially with Fleet Board. Now we see markets like food delivery taking off in cities. Do you see a connection – that it is not only about moving people but it could be about moving goods as well.

DGtM: For me it was a logical step to move from freight mobility to people mobility. Both are quite similar businesses with regards to routing and needing the same infrastructure in urban areas. Against the backdrop of infrastructure/resource limitations, the key is to be able to combine people mobility and freight mobility in the most efficient way in order to still retain the convenience element on the one side and, on the other, have livable cities without eating up more space for traffic than necessary.

SS: Of the all the five different types NOW branded mobility services within the group, would you say yours has the highest potential to grow?

DGtM: We operate more as a family, so our philosophy is to grow together. The ecosystem can be the most compelling when we all contribute from different angles. That is the most important message – that we can all be the winners together.

SS: In terms of organizational structure, you have five different NOW branded mobility service offerings. Is there one person holistically overseeing all these five?

DGtM: There is no one holding or one CEO overseeing all five mobility service brands. Instead, there are five independent JVs but with the same shareholder structure. We also have a NOW board and the CEOs and CFOs of these five verticals meet once a month to see how we can collaboratively grow the ecosystem.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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